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South Korea
South Korea’s GDP grew by 2.9 percent during the 3rd quarter of 2009 (July – Sep 2009) which is all time high for the country during the last 7 years.
Major factors for growth
• South Korea’s GDP growth during the quarter is attributed to
o Growth in domestic demand
o Growth in exports
• Exports of South Korea grew by 5.1% during the last quarter
• Private sector played a big role in the growth of the economy
• The GDP growth is considered surprise as the Bank of Korea had earlier projected the economy to contract 1.6 percent during 2009.
• Robust earnings by leading exporters like Hyundai Motor and Samsung Electronics played a big role in the recovery
• The recovery was also helped by record low interest rates and big government spending.
• Bank of Korea has projected that the recovery will be 5% during the fourth quarter of the current year
Challenges
• South Korea still faces the delay in the recovery of global Economic slowdown.
• Inventory has increased while consumption and construction investment has not grown
Indian_Rupee
The Reserve Bank of India has projected that Indian economy will grow by 6.5 percent during 2009-10.
Indian economy grew by 6.7 percent during 2008-09 breaking a growth of 9% during the previous 3 years. Year 2008-09 has been one of the greatest testing years for the world economy. Faced with the greatest threat of recession, the central banks across the globe has been on its toes and had to pump in money to solve the financial crisis. The soundness of the financial institutions was tested after the fall of Lehman brothers in US.
The report prepared by RBI observes that the Indian financial system in general and banking system in particular, have withstood the adverse effects of the global economic crisis. The economy has remained robust and resilient. Although the international economic slowdown had its impact on the Indian economy, the banking sector in India was relatively immune from the crisis, as the exposure of Indian banking system to toxic assets was minimal. More importantly, the Reserve Bank’s initiatives regarding adoption of counter-cyclical prudential regulations framework, both during credit boom period as well as during the slowdown, assumed significance.
Positive signals for the growth during 2009-10
1. Industrial sector is recovering and has grown at the fastest pace in the last 22 months
2. Recovery phase in World market, especially in US and Europe
3. Low inflation growth except in food prices. Inflation is expected to reach 6% by March 2010
4. Strong growth in exports in the second half of the 2009-10
5. FDI expected to increase
Factors which need to be monitored
1. Rising food prices as there is expectation of a decline in agriculture output due to bad monsoon
2. Global inflationary pressures will be high – oil and commodity prices rising
3. fears of fiscal deterioration and concerns about inflation along with the stimulus measures
4. Decline in kharif acreage resulting in 11 million tone drop in food production, 6 mt fall in pulses
5. International economic condition can affect the Indian economy seriously.
